The Boeing Co. (BA) announced that FedEx Corporation (FDX) has ordered four more 777 freighter jets with an average list price of $269.1 million per plane. The total order reaches approximately $1.08 billion.
FedEx is the largest operator of the 777 freighter jets. Currently, FedEx has 17 of the planes on order with 10 already in service. Additionally, it has made a separate order for 15 of the jets subject to the Congress not changing any of the governing laws.
777 freighter jets, the world’s largest twin-engine cargo planes, first connected the FedEx SuperHub in Memphis with Shanghai, China. The planes can carry 178,000 pounds of cargo across 5,800 nautical miles, which on land would measure 6,675 miles. Not only does the 777 save time, it also reduces emissions by 18%. FedEx hopes that its investments in the 777 freighter jets would help reduce its carbon dioxide aircraft emissions by 20% by 2020.
Freighters are a big part of Boeing’s airplane business. Recently, Korean Air also ordered two more 747-8 freighters amounting to $639.0 million at list prices.
Boeing is among the best-positioned in its sector due to its balanced exposure to commercial aircraft and defense equipment. Overall, strong order booking and a globally diversified customer base will help maintain the growth momentum.
However, in the near term, headwinds over 787 delays along with expected cutbacks in the 2012 U.S. defense budget loom large over the current valuation of the company. The company presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock.
Based in Chicago, Boeing Company is a premier jet aircraft manufacturer and one of the largest defense contractors in the U.S. Together with its subsidiaries, the company engages in the design, development, manufacture, sale, and support of commercial jetliners, military aircraft, satellites, missile defense, human space flight, and launch systems and services worldwide.
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